Safe for now
September 22, 2011
Swedish carmaker Saab has dodged bankruptcy after an appeals court gave the company temporary protection from creditors on Wednesday.
The appeals court approved the carmaker's request for voluntary reorganization, overturning an earlier court ruling and giving the company time to reorganize and secure additional funding.
The 60-year-old auto manufacturer has been struggling to stay in business ever since General Motors sold it last year.
Idle assembly lines
Saab first halted production in late March after suppliers temporarily stopped delivering parts because they hadn't been paid. The assembly lines in its main factory in Trollhaettan have been completely idle since June. The carmakers owes suppliers about 150 million euros. ($205 million).
Suppliers aren't the only ones demanding money. Saab employees have been waiting for their pay checks for months. Their long wait prompted unions to take legal action.
In August, after Saab delayed paying wages for the third consecutive month, trade unions tried to force the company into bankruptcy to activate a state-funded program that would cover workers' salaries.
Although the unions failed with their bankruptcy filings, they succeeded nevertheless in securing the wages of Saab employees: Creditor protection also activates the state wage-guarantee scheme.
The IF Metall trade union said in a statement that Saab and its employees will now receive "much-needed breathing space to systematically develop a long-term business plan."
Rocky ride ahead
Saab has been on a bumpy road for the past couple of years, and still faces a rocky immediate future.
The carmaker was rescued from closure last year after the Dutch group, Spyker, which is now called Swedish Automobile, bought it from GM.
Saab has been scrambling to find money to stay afloat ever since.
The company hopes protection from creditors will allow it to survive until authorities in China approve a 245 million euro ($336 million) investment by Zhejiang Youngman Lotus Automobile and Pang Da Automobile Trade Co. Saab expects approval by November.
Zhejiang Youngman said is also prepared to give Saab a bridging loan worth 70 million euros.
At this point, it looks as if Saab's future may well lie in the hands of the Chinese and their ever-deeper pockets, as is the case with many other companies - and even countries - these days.
Author: John Blau (Reuters, AFP)
Editor: Sam Edmonds